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13.4.1. Main Rules

Transfer pricing concept was introduced in Cypriot Tax legislation in 2003 in preparation for Cyprus EU membership. It follows the "arm's length principle" established by the OECD, although statutory rules are limited.

A new rule, with retroactive effect from 1 January 2015, requires the tax authorities to make a corresponding adjustment (reduction) to the tax base of a group member involved in a transaction when a transfer pricing adjustment (increase) is made to the tax base of the other group member involved in the transaction.